Linwood Stalls

Short Sales

Ideally, when a property owner sells, he or she makes a profit. But there are several reasons a seller could be "upside down" or owe money at closing. They may not have owned the property long enough for there to be enough appreciation to allow a profit or to cover costs. In some markets, a property make have actually lost value since the purchase. Or the seller may have refinanced, and already have taken out the equity in the property at that time (equity that is no longer available to pay seller closing costs or provide a profit when selling).

Those seller that are upside down must bring money to closing. If they do not have the money, they MAY qualify for a "short sale". A short sale is when the seller owes money at closing, and the hoilder of the mortgage (the bank) agrees to consider paying the difference.

The first step for the seller is to have a realtor determine the current market value of the property. (See "Home Seller 101"). Then the realtor calculates the seller's closing costs to determine an Estimated Seller Net. If the amount owed on the mortgage, plus the closing costs, do not add up to the current market value, the seller will be "short". If the seller cannot pay that amount they are "short", they should have the realtor direct them to a local attorney specializing in short sales, one that will do the work at no cost to the seller.

The seller should have the attorney's confirmation that the bank will allow a short sale. While a real estate professional is equipped to market properties and handle negotiations between buyers and sellers, a real estate attorney should handle negotiations between "short-sale" sellers and the bank. Short sales can result in short-term and long-term consequences for the seller that may affect their credit and debt. That is why it is important that the seller have an attorney represent them to the bank, negotiate on their behalf to the bank, and explain to the seller their "short sale" agreement with the bank. 

The seller